5 Assumptions No Smart Consumer Should Ever Make

In some situations, paying more doesn’t get you more, and paying the same costs you more in the long run.

Here are five examples of when assuming too much can cause you to make foolish (and costly) decisions.

ASSUMPTION: 90% off means a savings of 90%.REALITY: A 90% discount has to be an amazingly fantastic deal, right? Well that sure sounds like a good deal. But a WiseBread post demonstrates that an item’s original price is just as important as the percentage discount—and often, that original price is meaningless. In this case, a Hobby Lobby store in Colorado was selling throw pillows for “90% Off!” Only the pillows were 90% off of “original” prices of $90 to $120, when the same pillows were readily available elsewhere for around $40. If no one ever comes close to paying that “original” $90 or $120, then those throw pillows—even when priced at a reasonably cheap $10—are not, in fact, discounted by 90%. The practice of using an inflated “original” price for the purpose of making a discount seem more impressive is called anchoring, and it’s one of the ways stores manipulate shoppers into buying stuff.

ASSUMPTION: The pricier the dish detergent, the better it works.REALITY: The truth is that the cheap stuff often cleans dishes just as well as the more expensive brands, according to Consumer Reports. “Price didn’t predict cleaning power,” the mag’s researchers say. All of the detergents did well in tests, and so CR says that it’s OK—smart, even—to buy based on the best price. In the tests, for instance, a $2.10 bottle of Ajax did as good a job on the dishes as a $15 bottle of something called The Laundress. $15 a bottle?!? That’s more than I (and most folks, based on recent shopping trends) spend on a bottle of wine.

ASSUMPTION: A cheaper car costs less money.REALITY: Up front, of course this is true, obviously. But what with gas prices soaring and with a wide range in costs to insure, maintain, and gas up different vehicles, a cheaper automobile can easily cost the buyer more in the long run than one with a higher sticker price. An LA Times column compares two cars that retail for about the same money, but since one gets considerably better gas mileage, the owner winds up spending $2,000 less annually at the pump.

ASSUMPTION: Bank checking accounts now have more fees than prepaid cards.REALITY: Everyone has heard that many basic checking accounts now come with all sorts of new fees and requirements. It’s gotten to the point that one might assume prepaid debit cards—which are hardly perfect and have plenty of fees of their own—may now be a better deal for consumers. But the Consumers Union “Defend Your Dollars” program has done the math, and in a typical banking scenario, checking accounts come with fewer fees the majority of the time. Even when assuming the hypothetical customer took steps to minimize fees and used direct deposit, 8 of the 12 prepaid cards had fees of over $100 in the first year. Without direct deposit, 9 of the 12 cards had fees of over $200 that year.

ASSUMPTION: Designer clothing logos don’t mean all that much.REALITY: In a series of studies summed up in the Economist, researchers found that participants responded much more positively to people wearing clothing prominently featuring the designer logos of Lacoste or Tommy Hilfiger. In one experiment, volunteers watched two videos of a man being interviewed for a job. In one video, the man wore a shirt with a logo. In the other, he had on the identical shirt with no logo. The guy with the logo was rated as much more suitable for the job. In other experiments, people were more likely to fill out surveys if the person asking was wearing a sweater with a logo, and people gave more money to charity when asked for donations by (yep) women wearing shirts with designer logos.